Government in public education and health

TN Ninan argues for a mental transition 'from the notion of being the monopoly (or dominant) provider of a service, to an agency that lets others do the work, supervises to make sure that it is done properly, and manages fiscal transfers to take care of the poor, who would otherwise not be able to afford private sector services in these areas.' He writes

There is no reason why the logic of contracting out and offering choice should not be extended to education, where in any case the trend seems to be for students to switch more to private schools—possibly reflecting greater dissatisfaction with public schools. The Planning Commission has had a furious internal debate in recent weeks on the issue of choice in education, and concluded that once you adjust for the different kinds of students who go to private and public schools, their quality of output is not very different. The logical course of action should then be, since nothing is lost, to offer choice and let the customer decide. In the field of health, the government may well find that an insurance system funded by the government, running in parallel with the public health system, might deliver superior results, and patients would then be free to choose the doctors and hospitals they want. Certainly, most government employees would be happy to go to a private hospital to get treatment, especially if the cost to their employer is no different.

To be sure, entrenched interest groups (like the teachers’ unions) will oppose such change, but schools exist for students, not teachers. Also, it has been shown time and again that the public sector tends to work better when it has to compete with the private sector—the Life Insurance Corporation’s spectacular results of the past year, in the face of stiff competition from private insurers, is testimony to this. Once the focus changes to the user of a service and not its provider, the argument is easy to grasp.